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Wealth management giant Perpetual says it will continue to advocate for shareholders despite failing to prove to the Federal Court that the cross shareholding between Brickworks and Washington H. Soul Pattinson is oppressive to minority shareholders.
Perpetual chief executive Geoff Lloyd said the company had advice from independent experts and investment professionals, and received direction from the Court that pursuing the action was justified.
"As an active value manager our role is to find value in companies which are attractively priced and have quality prospects to deliver for investors. We will continue to perform that role and advocate for our unitholders," Mr Lloyd said.
"Although these investments have performed well for our unitholders, our intention throughout this matter was to try and unlock additional value for them.
"Ultimately, while we did not get the outcome we hoped for in this matter, we acted and will continue to act in the best interest of our unitholders."
Perpetual's funds remain investors in Brickworks and Soul Patts.
Justice Jayne Jagot's full judgement on the matter was suppressed until Wednesday morning. The judgement reinforces Perpetual's sound defeat in the case and details the fund manager's 10-year campaign to unpick the cross shareholding.
Perpetual argued that the chairman of Brickworks and Soul Patts, Robert Millner, ran the two companies like a family business, and had overt influence over their directors.
Perpetual was particularly aggrieved by the appointment of Robert Millner's son Thomas Millner to the Soul Patts board in 2010.
"The mere fact of the appointment of Mr Thomas Millner to the board of Soul Pattinson evidences the intention of the family that there should be a fifth generation of Millner family control," Perpetual argued.
It also argued the fact that the appointment of Thomas as a director just five days after the company's annual general meeting in 2010 via a board resolution was designed "to enable him to have the maximum possible time in office as a director before having to offer himself for re-election at the 2011 AGM, and to present himself as an already established director".
While Justice Jagot said the events around the appointment of Thomas "disclose the potential for the structure of the companies to give rise to actual or perceived conflicts of interest," she found that "Perpetual has not proved that Thomas Millner did not hold qualifications and experience which the board did not possess before his appointment."
Justice Jagot said the "above average" financial performance of both Brickworks and Soul Patts and the fact no one – including Perpetual – has questioned the competency of the board, "undermine Perpetual's case that the Millner family controls the boards of each company either by acting in concert or by the existence of an agreement, arrangement or understanding to that effect.
"It has not proved that the cross shareholding has caused any decision adverse to the performance of either company.
"There seems to be consensus that the boards of each company, apart from the complaint about the cross shareholding, have been competent and effective managers in the interests of their respective shareholders. As such, there is nothing which calls for any explanation as to why a 40-year-old structure has not been dismantled.
"If the cross shareholding had resulted in any adverse consequence, such as retention of a poorly performing board or a poor decision affected by a conflict of interest or an improvident transaction, then there might be something to explain."